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Theory of consumer behaviour — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsTheory of consumer behaviour4 Marks
Question
Suppose a consumer wants to consume two goods which are available only in integer units. The two goods are equally priced at Rs $10$ and the consumer's income is Rs $40$.
  1. Write down all the bundles that are available to the consumer.
    1. Among the bundles that are available to the consumer, identify those which cost her exactly Rs $40$.
✓

Answer

  1. $P_1$ = Rs $10$
$P_2$ = Rs $10$
$M$ = Rs $40$
$\text{Budget set}=\text{P}_1\text{x}_1+\text{P}_2\text{x}_2\leq40\text{M}$
$10\text{x}_1+10\text{x}_2\leq40$
The bundles that are available to the consumer should cost less than or equal to Rs 40.

$\text{Horizontal intercept }=\frac{\text{M}_2}{\text{P}_1}=\frac{40}{10}=4$
$\text{Vertical intercept}=\frac{\text{M}^2}{\text{P}_2}=\frac{40}{10}=4$
$\text{Slope}=\frac{-\text{P}_1}{\text{P}_2}=\frac{-10}{10}=-1$
  1. The bundles in the shaded region $(\triangle\text{AOB})$ are all available to the consumer, including the bundles lying on the line AB.
(0, 0) (0, 1) (0, 2) (0, 3) (0, 4)
(1, 0) (1, 1) (1, 2) (1, 3) (2, 0)
(2, 1) (2, 2) (3, 0) (3, 1) (4, 0)
The coordinates that lie on the line AB cost exactly the same as the income of the consumer. The bundles are as follows:
(0,4) (1,3) (2,2) (3,1) (4,0)

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